“Study Of Mutual Fund Awareness”

A Project Submitted

To

University of Mumbai
For partial completion of the degree of

Master in Commerce

Under the

Faculty of Commerce
By

JATIN UDHAV ANDHALE

Seat No: 2122204
Semester: III

Under the Guidance of

Dr. Vinayak R. Gandal ([Link], NET, Ph. D)

[Link]’s
[Link], Khopoli.
410203

December, 2021

1
“Study Of Mutual Fund Awareness”

A Project Submitted

To

University of Mumbai
For partial completion of the degree of

Master in Commerce

Under the

Faculty of Commerce
By

JATIN UDHAV ANDHALE

Seat No: 2122204
Semester: III

Under the Guidance of

Dr. Vinayak R. Gandal ([Link], NET, Ph. D)
[Link]’s
[Link], Khopoli.
410203

December, 2021

2
KHALAPUIR TALUKA SHIKSHAN PRASARAK MANDAL’S
KHOPOLI MUNICIPAL COUNCIL COLLEGE, KHOPOLI,
TAL: KHALAPUR, DIST: RAIGAD. PIN NO: 410203

---------------------------------------------------------------------------------------------------------------------

Certificate

This is to certify that Mr. Jatin Udhav Andhale has worked and duly completed his Project
Work for the degree of Master in Commerce under the Faculty of Commerce in the subject of
Advanced Accounting, Corporate Accounting & Financial Management and his project is
entitled, “Study of Mutual Fund Awareness” under my supervision.
I further certify that the entire work has been done by the learner under my guidance and that
no part of it has been submitted previously for any Degree or Diploma of any University.
It is his own work and facts reported by her/his personal findings and investigations.

Signature of Project Guide

Signature of Principal Seal of the
College
Dr. Vinayak R. Gandal

Signature of External Examiner Signature of Internal Examiner

Date of submission:

3
Declaration by learner

I the undersigned Mr. Jatin Udhav Andhale here by, declare that the work
embodied in this project work titled “Study of Mutual Fund Awareness ” , forms
my own contribution to the research work carried out under the guidance of
Dr. Vinayak R. Gandal is a result of my own research work and has not been
previously submitted to any other University for any other Degree/ Diploma to
this or any other University.
Wherever reference has been made to previous works of others, it has been
clearly indicated as such and included in the bibliography.
I, here by further declare that all information of this document has been
obtained and presented in accordance with academic rules and ethical conduct.

Name and Signature of the learner

Certified by
Name and signature of the Guiding Teacher
Dr. Vinayak R. Gandal

4
Acknowledgment

I would like to acknowledge the following as being idealistic channels and fresh
dimensions in the completion of this project.
I take this opportunity to thank the University of Mumbai for giving me
chance to do this project.
I would like to thank my Principal, Dr. M.B. Khanvilkar for providing the
necessary facilities required for completion of this project.
I take this opportunity to thank our Co-ordinator [Link] V.R for her moral
support and guidance.
I would also like to express my sincere gratitude towards my project guide
Dr. Gandal V. R whose guidance and care made the project successful.
I would like to thank my College Library, for having provided various
reference books and magazines related to my project.
Lastly, I would like to thank each and every person who directly or indirectly
helped me in the completion of the project especially my Parents and Peers
who supported me throughout my project.

5
INDEX

Title Study of Mutual fund Awareness Page No.

Chapter: Introduction
1 1.1 Introduction to Mutual Funds 07
1.2 Selection and relevance of the 09
problem
1.3 Historical background of mutual 10
fund
1.4 Definitions of Related Aspects 12
1.5 Characteristics of Mutual fund 13
1.6 Net Assets Value of Scheme 15
1.7Scheme Classification by 16
Organization Structure
1.8 Advantages of Mutual Fund 19
1.9 Disadvantages of Mutual Fund 22
1.10 Scope of Mutual Fund 23

Chapter: Research Methodology 24

2 2.1 Introduction 24
2.2 Objectives 24
2.3 Hypothesis 25
2.4 Limitation of Studies 25
2.5 Significance of Studies 25
2.6 Sample size 26
2.7 Data Collection 26
2.8 Technique and Tools 26

Chapter: Literature Review 27

3
Chapter: Data Analysis, Interpretation and 29
4 Presentation

Chapter: Findings, Suggestions and Conclusions

5 5.1 Findings 46
5.2 Suggestions 47
5.3 Conclusions 48
Bibliography 49
Appendix

6
CHAPTER: 1. INTRODUCTION

1.1 Introduction to Mutual Funds

Mutual Funds are financial intermediaries which collect the savings of investors
and invest them in primary and secondary securities, like money market
instruments, corporate and government bonds, and equity shares of joint stock
companies. They have emerged as rivals to banks in savings mobilisation
because banking services could not show extra-ordinary efforts to employ
household savings in remunerative sectors.

Individual investors have developed keen interest in the capital market,

attaining higher returns and capital gains along with fiscal concessions. Since
small investors generally do not have sufficient time, knowledge, experience
and resources for directly approaching the capital market, they have to rely on
an intermediary which undertakes informed investment decisions and provides
the benefits of professional expertise. This is what a mutual fund does.

Investors achieve important advantages from mutual funds such as expert

professional management, reduction in risk, diversified portfolios, liquidity of
investment, tax benefits and economies of scale. The interests of the investors
are protected by SEBI.

Mutual funds are governed by SEBI. SEBI has the authority to issue guidelines
and to supervise and regulate the working of mutual funds through Mutual
Funds Regulations, 1993 have been amended from time to time. Mutual funds
provide stability arid sustainability to the stock market also.

Mutual funds in India provide linkage among various financial institutions

operating in the money and capital markets with which the household and

7
corporate sectors are closely linked. They mobilise personal savings and enable
small and medium investors to reap benefits of their investments.

The corporate sector benefits by investing these investments for its production
and growth. Therefore, mutual funds have been playing a crucial role in India’s
economic growth by mobilising and allocating savings and investments.

Investors Mutual fund schemes Mark

Invests in variety of
Invest their money
stocks / bonds

Profit / loss from Profit / loss from

portfolio investment individuals

Investment Flow

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1.2 Selection and relevance of the problem

1. To study and analyze the awareness level of investors of mutual funds.

2. To measure the satisfaction level of investor regarding mutual funds.

3. An attempt has been made to measure various variable’s playing in the

minds of investors in terms of safety, liquidity, service, returns and tax
saving.

4. To get insight knowledge about mutual funds.

5. To know the mutual fund performance level in the present market.

6. To analyze the comparative study between other leading mutual funds in

present market.

7. To know the awareness of mutual fund in different groups in investors.

9
1.3 Historical background of mutual fund

First Phase - 1964-1987

Unit Trust of India (UTI) was established in 1963 by an Act of Parliament. It
was set up by the Reserve Bank of India and functioned under the Regulatory
and administrative control of the Reserve Bank of India. In 1978 UTI was de-
linked from the RBI and the Industrial Development Bank of India (IDBI) took
over the regulatory and administrative control in place of RBI. The first scheme
launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs. 6,700
crores of assets under management.

Second Phase - 1987-1993 (Entry of Public Sector Funds)

1987 marked the entry of non-UTI, public sector mutual funds set up by public
sector banks and Life Insurance Corporation of India (LIC) and General
Insurance Corporation of India (GIC). SBI Mutual Fund was the first non-UTI
Mutual Fund established in June 1987 followed by Canbank Mutual Fund (Dec
87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund
(Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC
established its mutual fund in June 1989 while GIC had set up its mutual fund in
December 1990.

Third Phase - 1993-2003 (Entry of Private Sector Funds)

With the entry of private sector funds in 1993, a new era started in the Indian
mutual fund industry, giving the Indian investors a wider choice of fund
families. Also, 1993 was the year in which the first Mutual Fund Regulations
came into being, under which all mutual funds, except UTI were to be
registered and governed. The erstwhile Kothari Pioneer (now merged with
Franklin Templeton) was the first private sector mutual fund registered in July
1993.
The number of mutual fund houses went on increasing, with many foreign
mutual funds setting up funds in India and also the industry has witnessed
several mergers and acquisitions. As at the end of January 2003, there were 33
mutual funds with total assets of Rs. 1,21,805 crores. The Unit Trust of India
with Rs. 44,541 crores of assets under management was way ahead of other
mutual funds.

Fourth Phase - since February 2003

In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI
was bifurcated into two separate entities. One is the Specified Undertaking of
the Unit Trust of India with assets under management of Rs. 29,835 crores as at

10
the end of January 2003, representing broadly, the assets of US 64 scheme,
assured return and certain other schemes. The Specified Undertaking of Unit
Trust of India, functioning under an administrator and under the rules framed by
Government of India and does not come under the purview of the Mutual Fund
Regulations.
The second is the UTI Mutual Fund, sponsored by SBI, PNB, BOB and LIC. It
is registered with SEBI and functions under the Mutual Fund Regulations. With
the bifurcation of the erstwhile UTI which had in March 2000 more than Rs.
76,000 crores of assets under management and with the setting up of a UTI
Mutual Fund, conforming to the SEBI Mutual Fund Regulations. the mutual
fund industry has entered its current phase of consolidation and growth.

11
1.4 Definition’s of Related Aspects

 A mutual fund is a professionally-managed investment scheme, usually

run by an asset management company that brings together a group of
people and invests their money in stocks, bonds and other securities.

 A mutual fund is a professionally managed Investment fund that pools

money from many investors to purchase securities

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1.5 Characteristics of Mutual fund

1. Low Fees or Expenses

Mutual funds with relatively low expense ratios are generally always desirable,
and low expenses do not mean low performance. In fact, it is very often the
case that the best-performing funds in a given category are among those that
offer expense ratios below the category average.

There are some funds that charge substantially higher-than-average fees and
justify the higher fees by pointing to the fund's performance. But the truth is
there is very little genuine justification for any mutual fund having an expense
ratio much over 1%.

Mutual fund investors sometimes fail to understand how big a difference even a
relatively small percentage increase in fund expenses can make in the investor's
bottom-line profitability. A fund with a 1% expense ratio charges an investor
with $10,000 invested in the fund $100 annually. If the fund generates a 4%
profit for the year, then that $100 charge takes away a full 25% of the investor's
profits. If the expense ratio is 2%, it takes half of the profits. But an expense
ratio of 0.25% only takes 6% of the investor's total profit. In short, expenses are
of critical importance for mutual fund investors, who should be diligent in
seeking out funds with low expense ratios.

In addition to the basic operating expenses charged by all funds, some funds
charge a "load," or a sales fee that can run as high as 6% to 8%, and some
charge 12b-1 fees used to cover advertising and promotional expenses for the
fund. There is no need for mutual fund investors to ever have to pay these
additional fees, since there are plenty of perfectly good funds to choose from
that are "no-load" funds and do not charge any 12b-1 fees.

2. Consistently Good Performance

Most investors utilize investing in mutual funds as part of their retirement
planning. Therefore, investors should select a fund based on its long-term
performance, not on the fact that it had one really great year. Consistent
performance by the fund's manager, or managers, over a long period of time
indicates the fund will likely pay off well for an investor in the long-run.

A fund's average return on investment (ROI) over a period of 20 years is more

important than its one-year or three-year performance. The best funds may not

13
produce the highest returns in any one year but consistently produce good,
solid returns over time. It helps if a fund has been around long enough for
investors to see how well it manages during bear market cycles. The best funds
are able to minimize losses during difficult economic periods or cyclical
industry downturns.

A large part of consistently good performance is having a good fund manager.

Investors should review a fund manager's background, previous experience,
and performance as part of their overall evaluation of the fund. Good
investment managers do not usually suddenly go bad, nor do poor investment
managers tend to suddenly become overachievers.

3. Sticking to a Solid Strategy

The best-performing funds perform well because they are directed by a
good investment strategy. Investors should be clearly aware of the fund's
investment objective and the strategy the fund manager uses to achieve that
objective.

Be wary of what is commonly called "portfolio drift." This occurs when the
fund manager drifts off course from the fund's stated investment goals and
strategy in such a way that the composition of the fund's portfolio changes
significantly from its original goals. For example, it may shift from being a
fund that invests in large-cap stocks that pay above-average dividends to being
a fund mainly invested in small-cap stocks that offer little or no dividends at
all. If a fund's investing strategy changes, the change and the reason for it
should be clearly explained to fund shareholders by the fund manager.

4. Trustworthy, With Solid Reputations

The best funds are perennially developed by well-established, trustworthy
names in the mutual fund business, such as Fidelity, T. Rowe Price, and the
Vanguard Group. With all the unfortunate investing scandals over the past 20
years, investors are well-advised to do business only with firms in which they
have the utmost confidence in, in regard to honesty and fiscal responsibility.
The best mutual funds are invariably offered by companies that are transparent
and upfront about their fees and operations, and they do not try to hide
information from potential investors or in any way mislead them.

5. Plenty of Assets, but Not Too Much Money

The best-performing funds tend to be those that are widely invested in but fall
short of being the funds with the very highest amount of total assets. When
funds perform well, they attract additional investors and are able to expand
their investment asset base. However, there comes a point at which a fund's

14
total assets under management (AUM) become so large as to be unwieldy and
cumbersome to manage.

When investing billions, it becomes increasingly difficult for a fund manager to

buy and sell stocks without the size of their transaction shifting the market
price, so it costs more than they would ideally wish to pay to acquire a large
amount of a specific stock. This can be particularly true for funds that seek
undervalued, less-popular stocks. If a fund suddenly looks to buy $50 million
worth of a stock that is ordinarily not very heavily traded, then the demand
pressure injected into the market by the fund's buying could drive the stock's
price substantially higher. This would make the stock less of a bargain than it
appeared when the fund manager evaluated it prior to deciding to add it to the
portfolio.

The same problem can occur when the fund seeks to liquidate a position in a
stock. The fund may hold so many shares of the stock that when it attempts to
sell them, the oversupply may put substantial downward pressure on the stock
price so that, although the fund manager intended to sell the shares at $50 a
share, by the time he is able to fully liquidate the fund's holdings of the stock,
the average realized sale price is only $47 a share.

Investors may wish to look for mutual funds that are well-capitalized,
indicating the fund has successfully drawn the attention of other individual
investors and institutions but has not grown to the point where the size of the
fund's total assets makes it difficult for the fund to be managed adroitly and
efficiently. Problems in managing the fund's assets may arise as the fund's total
assets grow beyond the $1 billion level.

1.6 NET ASSET VALUE (NAV) OF A SCHEME

The performance of a particular scheme of a mutual fund is denoted by Net

Asset Value (NAV).

Mutual funds invest the money collected from the investors in securities
markets. In simple words, Net Asset Value is the market value of the securities
held by the scheme. Since market value of securities changes every day, NAV

15
of a scheme also varies on day to day basis. The NAV per unit is the market
value of securities of a scheme divided by the total number of units of the
scheme on any particular date. For example, if the market value of securities of
a mutual fund scheme is Rs 200 lakhs and the mutual fund has issued 10 lakhs
units of Rs. 10 each to the investors, then the NAV per unit of the fund is Rs.20.
NAV is required to be disclosed by the mutual funds on a regular basis - daily
or weekly - depending on the type of scheme.

1.7 SCHEME CLASSIFICATION BY ORGANIZATION

STRUCTURE
• Open-ended schemes are perpetual, and open for subscription and repurchase
on a continuous basis on all business days at the current NAV.

• Close-ended schemes have a fixed maturity date. The units are issued at the
time of the initial offer and redeemed only on maturity. The units of close-ended
schemes are mandatorily listed to provide exit route before maturity and can be
sold/traded on the stock exchanges.

• Interval schemes allow purchase and redemption during specified transaction

periods (intervals). The transaction period has to be for a minimum of 2 days
and there should be at least a 15-day gap between two transaction periods. The
units of interval schemes are also mandatorily listed on the stock exchanges.

SCHEME CLASSIFICATION BY PORTFOLIO MANAGEMENT

Active Funds

In an Active Fund, the Fund Manager is ‘Active’ in deciding whether to Buy,

Hold, or Sell the underlying securities and in stock selection. Active funds adopt
different strategies and styles to create and manage the portfolio.

The investment strategy and style are described upfront in the Scheme
Information document (offer document)

Active funds expect to generate better returns (alpha) than the benchmark index.

The risk and return in the fund will depend upon the strategy adopted.

Active funds implement strategies to ‘select’ the stocks for the portfolio.

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Passive Funds

Passive Funds hold a portfolio that replicates a stated Index or Benchmark e.g. –

Index Funds

Exchange Traded Funds (ETFs)

In a Passive Fund, the fund manager has a passive role, as the stock selection /
Buy, Hold, Sell decision is driven by the Benchmark Index and the fund
manager / dealer merely needs to replicate the same with minimal tracking
error.

ACTIVE V/S PASSIVE FUNDS

Active Fund –

Rely on professional fund managers who manage investments.

Aim to outperform Benchmark Index

Suited for investors who wish to take advantage of fund managers' alpha
generation potential.

Passive Funds –

Investment holdings mirror and closely track a benchmark index, e.g., Index
Funds or Exchange Traded Funds (ETFs)

Suited for investors who want to allocate exactly as per market index.

Lower Expense ratio hence lower costs to investors and better liquidity

CLASSIFICATION BY INVESTMENT OBJECTIVES

Mutual funds offer products that cater to the different investment objectives of
the investors such as –

Capital Appreciation (Growth)

Capital Preservation

Regular Income

Liquidity

Tax-Saving
17
Mutual funds also offer investment plans, such as Growth and Dividend
options, to help tailor the investment to the investors’ needs.

GROWTH FUNDS

Growth Funds are schemes that are designed to provide capital appreciation.

Primarily invest in growth oriented assets, such as equity

Investment in growth-oriented funds require a medium to long-term investment

horizon.

Historically, Equity as an asset class has outperformed most other kind of

investments held over the long term. However, returns from Growth funds tend
to be volatile over the short-term since the prices of the underlying equity shares
may change.

Hence investors must be able to take volatility in the returns in the short-term.

INCOME FUNDS

The objective of Income Funds is to provide regular and steady income to

investors.

Income funds invest in fixed income securities such as Corporate Bonds,

Debentures and Government securities.

The fund’s return is from the interest income earned on these investments as
well as capital gains from any change in the value of the securities.

The fund will distribute the income provided the portfolio generates the
required returns. There is no guarantee of income.

The returns will depend upon the tenor and credit quality of the securities held.

LIQUID / OVERNIGHT /MONEY MARKET MUTUAL FUNDS

Liquid Schemes, Overnight Funds and Money market mutual fund are
investment options for investors seeking liquidity and principal protection, with
commensurate returns.
– The funds invest in money market instruments* with maturities not exceeding
91 days.

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– The return from the funds will depend upon the short-term interest rate
prevalent in the market.

These are ideal for investors who wish to park their surplus funds for short
periods.
– Investors who use these funds for longer holding periods may be sacrificing
better returns possible from products suitable for a longer holding period.

* Money Market Instruments includes commercial papers, commercial bills,

treasury bills, Government securities having an unexpired maturity up to one
year, call or notice money, certificate of deposit, usance bills, and any other like
instruments as specified by the Reserve Bank of India from time to time.

CLASSIFICATION BY INVESTMENT PORTFOLIO

Mutual fund products can be classified based on their underlying portfolio

composition
– The first level of categorization will be on the basis of the asset class the fund
invests in, such as equity / debt / money market instruments or gold.
– The second level of categorization is on the basis of strategies and styles used
to create the portfolio, such as, Income fund, Dynamic Bond Fund,
Infrastructure fund, Large-cap/Mid-cap/Small-cap Equity fund, Value fund, etc.
– The portfolio composition flows out of the investment objectives of the
scheme.

1.8 Advantages Of Mutual Funds

Liquidity
Unless you opt for close-ended mutual funds, it is relatively easier to buy and
exit a mutual fund scheme. You can sell your open-ended equity mutual fund
units when the stock market is high and make a profit. Do keep an eye on the
exit load and expense ratio of the mutual fund.

Diversification
Equity mutual funds have their share of risks as their performance is based on
the stock market movements. Hence, the fund manager spreads your investment

19
across stocks of companies across various industries and different sectors
called diversification. In this way, when one asset class doesn’t perform, the
other sectors can compensate to avoid loss for investors.

Expert Management
A mutual fund is good for investors who don’t have the time or skills to do the
research and asset allocation. A fund manager takes care of it all and makes
decisions on what to do with your investment.

The fund manager and the team of researchers decide on the appropriate
securities such as equity, debt or a mix of both depending on the investment
objectives of the fund. Moreover, the fund manager also decides on how long to
hold the securities.

Your fund manager’s reputation and track record in fund management should be
an essential criterion for you to choose a mutual fund. The expense ratio (which
cannot be more than 2.25% annualised of the daily net assets as per SEBI)
includes the fees of the fund manager.

Less Cost of Bulk Transaction

You must have noticed how price drops with the purchase of increased
volumes. For instance, if a 100g toothpaste costs Rs 10, you might get a 500g
pack for say, Rs 40.
The same logic applies to mutual fund units as well. If you buy multiple mutual
fund units at a time, the processing fees and other commission charges will be
lesser as compared to buying one mutual fund unit.

Invest in smaller denominations

By investing in smaller denominations of as low as Rs 500 per SIP instalment,
you can stagger your investments in mutual funds over some time. This reduces
the average cost of investment – you spread your investment across stock
market lows and highs. Regular (monthly or quarterly) investments, as opposed
to lumpsum investments, give you the benefit of rupee cost averaging.

Suits your Financial Goals

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There are several types of mutual funds available in India catering to investors
across all walks of life. No matter what your income is, you must make it a
habit to set aside some amount (however small) towards investments. It is easy
to find a mutual fund that matches your income, time horizon, investment goals
and risk appetite.

Cost-efficiency
You can check the expense ratio of different mutual funds and choose the one
with the lowest expense ratio. The expense ratio is the fee for managing your
mutual fund.

Quick and Hassle-free Process

You can start with one mutual fund and slowly diversify across funds to build
your portfolio. It is easier to choose from handpicked funds that match your
investment objectives and risk tolerance.

Tracking mutual funds will be a hassle-free process. The fund manager, with

the help of his team, will decide when, where and how to invest in securities
according to the investment objectives. In short, their job is to beat the
benchmark index and deliver maximum returns to investors, consistently.

Tax Efficiency
You can invest in tax-saving mutual funds called ELSS which qualifies for tax
deduction up to Rs 1.5 lakh per annum under Section 80C of the Income Tax
Act, 1961. Though a 10% tax on Long-Term Capital Gains (LTCG) above Rs 1
lakh is applicable, they have consistently delivered higher returns than other
tax-saving instruments in recent years.

Automated Payments
It is common to delay SIPs or postpone investments due to some reason. You
can opt for paperless automation with your fund house or agent by submitting a
SIP mandate, where you instruct your bank account to automatically deduct SIP
amounts when it’s due. Timely email and SMS notifications make sure you stay
on track with mutual fund investments.

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Safety
There is a general notion that mutual funds are not as safe as bank products.
This is a myth as fund houses are strictly under the purview of statutory
government bodies like SEBI and AMFI. One can easily verify the credentials
of the fund house and the asset manager from SEBI. They also have an
impartial grievance redressal platform that works in the interest of investors.

Systematic or One Time Investment

You can plan your mutual fund investment as per your budget and convenience.
For instance, starting a SIP (Systematic Investment Plan) on a monthly or
quarterly basis in an equity fund suits investors with less money. On the other
hand, if you have a surplus amount, go for a one-time lumpsum investment in
debt funds.

1.9 Disadvantages Of Mutual Funds

Cost of Managing the Mutual fund

The salary of the market analysts and fund manager comes from the investors
along with the operational costs of the fund. Total fund management charges are
one of the first parameters to consider when choosing a mutual fund. Higher
management fees do not guarantee better fund performance.

Exit Load
You have exit load as fees charged by AMCs when exiting a mutual fund. It
discourages investors from redeeming investments for some time. It also helps
the fund manager garner the required funds to purchase the appropriate
securities at the right price and time.

Dilution
While diversification averages your risks of loss, it can also dilute your profits.
Hence, you should not invest in many mutual funds at a time.
As you have just read above, the benefits of mutual funds can undoubtedly
override the disadvantages, if you make informed choices.
However, investors may not have the time, knowledge or patience to research
and analyse different mutual funds. Investing with ClearTax could solve this
problem as we have already done the homework for you by handpicking the
top-rated funds from the best fund houses in the country.

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1.10Scope of Mutual Funds
The scope has grown enormously over the years. In the first age of mutual
funds, when the investment management companies started to offer mutual
funds, choices were few. Even though people invested their money in mutual
funds as these funds offered them diversified investment option for the first
time. By investing in these funds they were able to diversify their investment in
common stocks, preferred stocks, bonds and other financial securities. At the
same time they also enjoyed the advantage of liquidity. With Mutual Funds,
they got the scope of easy access to their invested funds on requirement.
But, in todays world, Scope of Mutual Funds has become so wide, that people
sometimes take long time to decide the mutual fund type, they are going to
invest in. Several Investment Management Companies have emerged over the
years who offer various types of Mutual Funds, each type carrying unique
characteristics and different beneficial features

23
CHAPTER:2. RESEARCH METHODOLOGY

2.1 Introduction

This study adopted is descriptive and analytical in approach so as to evaluate

and analyse the problems under the study. This study aims at obtaining data on
consumer awareness on mutual funds. This study is conducted in the Kerala
Region. A sample size of 61 were collected using a structured questionnaire
under the random sampling technique. The survey method was used for
collecting data using questionnaire and google forms and the five-level Likert
scale was used. The responses collected were analysed using simple percentage
method. This study adopted is descriptive and analytical in approach so as to
evaluate and analyse the problems under the study. This study aims at obtaining
data on consumer awareness on mutual funds. This study is conducted in the
Maharashtra Region. A sample size of 61 were collected using a structured
questionnaire under the random sampling technique. The survey method was
used for collecting data using questionnaire and google forms was used. The
responses collected were analysed using simple percentage method.

2.2 Objective

 To analyse the purpose of investment in mutual funds.

 To know the investment preferences in mutual funds with respect to other

investment opportunities.

 To analyse whether investment in this medium has any impact in investment

with regard to demographic profile.

 To study and analyze the awareness level of investors of mutual funds.

24
 To measure the satisfaction level of investor regarding mutual funds

2.3 Hypotheses

 Ho – There is significant relation between the investors’ age and the

knowledge level about mutual fund.

 H1 – There is significant relation between the investors’ profession and the

knowledge level about mutual fund.

 H2 – There is a significant relationship between the extent of risk and

satisfaction level of mutual funds

 H3 – There is a significant relationship between expected return and safety

of mutual funds.

2.4 Limitations of the study

The study is only in Khalapur district. So the attitude of investors in other

districts in Maharashtra is unknown.

Due to time constraints the study was limited to only 61 investors

2.5 Significance of the study

The success of a mutual fund depends upon the awareness and confidence level
of the investor. The study observed low level of awareness about mutual fund
among the investor. Its also observed significant difference in the awareness
level the investor belonging to different education background and gender.

25
2.6 Sample size

The sample size covered 61 investors of Maharashtra. where large numbers of

MFs investors are available are identified for this study using Purposive
Sampling Method. In order to collect referred information from the retail
investors, the sampling design was carefully decided and properly chosen for
the study.

2.7 Data Collection

a) Primary data - The researcher was used survey method for data
collection. This study gathered the desired data through primary sources.
Primary data were collected through a structured questionnaire

b) Secondary data collected from Internet, Magazines, news paper

2.8 Techniques and tools

The collected primary data were analysed by applying various statistical tools
such as descriptive statistics like simple percentages cross-tabulation.

26
CHAPTER: 3. REVIEW OF LITERATURE

The world of finance has witnessed an exponential growth in the post

information technology revolution of the 1990s. The present study made an
attempt to do a diagnostic analysis of past literature, though a lot of research has
been done on investors' perception on mutual funds. In the present study,
literature review on various dimensions with respect to the measurement of
performance, risk - return trade off of mutual funds, and investors' awareness,
education, and interest regarding mutual funds was examined to clear the
gateway for the upcoming researchers in the field of the mutual fund industry.

Literature on mutual fund performance evaluation is enormous. A few research

studies that have influenced the preparation of this paper substantially are
discussed in this section. Sharpe, William F. (1966) suggested a measure for the
evaluation of portfolio performance. Drawing on results obtained in the field of
portfolio analysis, economist jack L. Treynor has suggested a new predictor of
mutual fund performance, one that differs from virtually all those used
previously by incorporating the volatility of a fund's return in a simple yet
meaningful manner. Michael C. Jensen (1967) derived a risk-adjusted measure
of portfolio performance (Jensen's alpha) that estimates how much a manager's
forecasting ability contributes to fund's returns. As indicated by Statman (2000),
the e SDAR of a fund portfolio is the excess return of the portfolio over the
return of the benchmark index, where the portfolio is leveraged to have the
benchmark index's standard deviation.

S. Narayan Rao, evaluated performance of Indian mutual funds in a bear market

through relative performance index, risk-return analysis, Treynor's ratio,
Sharpe's ratio, Sharpe's measure, Jensen's measure, and Fama's measure. The
study used 269 open-ended schemes (out of total schemes of 433) for
computing relative performance index. Then after excluding funds whose

27
returns are less than risk-free returns, 58 schemes are finally used for further
analysis. The results of performance measures suggest that most of mutual fund
schemes in the sample of 58 were able to satisfy investor's expectations by
giving excess returns over expected returns based on both premium for
systematic risk and total risk. Bijan Roy, et. al., conducted an empirical study on
conditional performance of Indian mutual funds. This paper uses a technique
called conditional performance evaluation on a sample of eighty-nine Indi an
mutual fund schemes. This paper measures the performance of various mutual
funds with both unconditional and conditi onal form of CAPM, Treynor- Mazuy
model and Henriksen-Merton model. The effect of incorporate ng lagged
information variable es into the Level ation of mutual fund managers'
performance is examine the Indian context. The results suggest that the use of
conditioning lagged information variables improves the performance of mutual
fund schemes, causing alphas to shift towards right and reducing the number of
negative timing coeffi cients. Mishra, et al., (2002) measured mutual fund
performance using lower partial moment. In this paper, measures of evaluating
portfolio performance based on lower partial moment are developed. Risk from
the lower partial moment is measured by taking into account only those states in
which return is below a pre-specified "target rate" like risk-free rate.
KshamaFernandes (2003)

evaluated index fund implementation in India. In this paper, tracking error of

index funds in India is measured. The consistency and level oftracking errors
obtained by some well -run index fund suggests that it is possible to attain low
levels of tracking error under Indian conditions. At the same time, there do seem
to be periods where certain index funds appear to depart from the discipline of
indexation. K. Pendaraki et al. studied construction of mutual fund portfolios,
developed a multi -criteria methodology and applied it to the Greek market of
equity mutual funds. The methodology is based on the combination of discrete
and continuous multi criteria decision aid methods for mutual fund selection and
composition. UTADIS multi -criteria decisi on aid method is employed in order
to develop mutual fund's performance models. Goal programming model is
employed to determine proportion of selected mutual funds in the final
portfolios. [Link] (2005) matched a sample of socially responsible stock
mutual funds matched to randomly selected conventional funds of similar net
assets to investigate differences in characteristics of assets held, degree of
portfolio diversification and variable effects of diversification on investment

28
performance. The study found that socially responsible funds do not differ
significantly from conventional funds in terms of any of these attributes.

AGE No. of Respondent PERCENTAGE

15 - 20 10 16.39
CHAPTER: 20 -25 25 40.98 4. DATA
25 - 30 15 24.59
ANALYSIS, 30 - 35 5 8.20
35 - 40 2 3.28
ABOVE 40 4 6.56
Total 61 100%
INTERPRETATION AND PRESENTATION

1. AGE WISE CLASSIFICATION OF RESPONDENT

29
Age wise no of respondant
2
4
10
5

15
25

15 - 20 20 -25 25 - 30 30 - 35 35 - 40 40 ABOVE

Interpretation

According to the survey the respondent where different age groups. There are
no respondent of age below 15 are in no number. The investor of age 15 to 20
are 10 in number with 16%. The investor of age 20 to 25 are 25 in number with
41%. The investor of age 25 to 30 are 15 in number with 25%. The investor of
age 30 to 35 are 55 in number with 8%. The investor of age 35 to 40 are 2 in
number and with 3.28%. The investor of age above 40 are 4 in number and with
6.56%.

2. GENDER WISE CLASSIFICATION OF RESPONDENTS

Gender No. of Respondent PERCENTAGE

male 49 80.33

female 12 19.67

Total 61 100%

30
AGE WISE RESPONDENT

female

male

0 10 20 30 40 50 60

Interpretation

In the survey number of male respondent are more in number that is about 80%,
and the next position has been occupied by female respondent they are about
20% of the sample, so mainly Men are preferring to go for investment.

3. OCCUPATION OF THE RESPONDENT

Occupation No. of Respondent PERCENTAGE

Student 28 45.90

Salaried person 22 36.07

Self Employed 4 6.56

Business man 7 11.48

Total 61 100%

31
Occupation wise respondent
7; 11%

4; 7%
Student
Salaried person
Self Employed
28; 46% Business man

22; 36%

Interpretation

According to survey the respondents were of different occupation. Most of

respondent are from Student occupy which is 28%. Respondent are form
Salaried person are 22%. Then come Business man with 7% and 5% belongs to
self employed.

4. DO RESPONDENT INVEST THEIR MONEY

Investments No. of Respondent PERCENTAGE

YES 20 32.79

NO 41 67.21

Total 61 100%

32
No. of Reapondant
45
40
35
30
25
20
15
10
5
0
YES NO

Interpretation

According to the survey there are 33% of respondent which is 20, invest their
money in the Mutual funds. and maximum number of respondents which is 41
in number with 67% are not invested their money in mutual funds.

5. HOW MUCH RESPONDENT KNOW ABOUT MUTUAL FUND

Options No. of Respondent PERCENTAGE

Totally Ignorant 15 34.88

Partial Knowledge of 13 30.23

Mutual Funds

Aware only of specific 9 20.93

scheme
Fully aware 6 13.95

Total 33 43 100%
No. of Reapondant

6
15
Totally Ignorant
Partial Knowledge of Mutual
Funds
9
Aware only of specific
scheme
Fully aware

13

Interpretation
According to the survey Totally Ignorant respondent are 15 in numbers. Then 13 in
number respondents are have Partial knowledge of mutual fund. After that 9
respondent comes with Aware only of specific schemes on which they invested. there
are 6 respondent who fully aware about mutual fund. And 18 people were not attempt
this question.

6. INVESTORS PREFERRED MODE OF INVESTING

Preference No. of Respondent PERCENTAGE

Public 29 59.18

Privet 20 40.82

Total 49 100%

34
No. of Reapondant

20

29

Public Privet

Interpretation

According to survey 29 respondent are believe to invest in public sector in

mutual fund and their 20 respondent are believe to invest in privet sector.12
respondents are not attempt this question

7. AWARENESS OF MUTUAL FUND THROUGH

Options No. of Respondent PERCENTAGE

Advertisement 28 56

Peer Group 6 12

Banks 8 16

Financial Advisors 8 16

Total 50 100

35
30

25

20

15

10

0
Advertisement Peer Group Banks Financial Advisors

Interpretation

According to the survey, the respondent are more aware of mutual fund through
advertisement who occupy 56%. Followed by Financial advisors and Bank 16%
and 16%, Peer group 12%.

8. RESPONDENT PREFERRED MODE OF INVESTMENT

Options No. of Respondent PERCENTAGE

Online 32 66.67

Offline 12 25.00

Both 4 8.33

Total 48 100%

36
Preferred Moad of Investment
4

12

32

Online Ofline Both

Interpretation

According to the survey, the respondent of online investment which is 32 in

number 67%. Then 12 in number are in offline which is 25%. And 8% is
selected both mode of investment.

9. PREFERRED INVESTING FACTORS BY RESPONDENTS

Factors No. of Respondent PERCENTAGE

Liquidity 10 20.41

Low Risk 19 38.78

High Return 14 28.57

Company Reputation 6 12.24

Total 49 100%

Interpretation

37
According to the survey, 19 respondent were selected low risk which is 39%.14
respondent were selected high return which is 29%.10 respondent were selected
liquidity which is 20% and 6 respondent were selected company reputation
which is 12%.

[Link] PREFRENCE TOWORDS MF SCHEMES

Schemes No. of Respondent PERCENTAGE

Open-Ended 8 13.11
Close-Ended 7 11.48
Mid-Cap 9 14.75
Liquid fund 8 13.11
Growth fund 8 13.11
Regular income fund 10 16.39
Long-Cap 6 9.84
Sector fund 5 8.20
Total 61 100%

Investor Prefrence Towords MF Schemes

Sector fund

Long-Cap

Regular income fund

Growth fund

Liquid fund

Mid-Cap

Close-Ended

Open-Ended
0 1 2 3 4 5 6 7 8 9 10

Interpretation

38
According to the survey, respondent are more invest money in regular income
fund which is 16%. Followed by Mid cap are15%, liquidity fund 13%, growth
fund 13%, open ended 13%, close-ended 11%, long cap 10%, sector fund 8%.

[Link] MODE OF INVESTMENT BY RESPONDENT

Mode No. of Respondent PERCENTAGE

One time investment 18 38.30

SIP 29 61.70

Total 47 100%

Preferred Mode by Respndent

18

29

One time investment SIP

Interpretation

According to the survey, the respondent more preferred systematic investment

plan which is 29 in number 62%. And 18 in number are preferred one time
investment which is 38%

39
[Link] PREFERRD TIME TO INVESTMENT

Options No. of Respondent PERCENTAGE

1 to 3 years 33 54.10

4 to 6 years 13 21.31

7 to 10 years 2 3.28

Above 10 years 13 21.31

Total 61 1.00

PREFERRED TIME TO INVESTMENT

33

13 13

1 to 3 years 4 to 6 years 7 to 10 years Above 10 years

Interpretation

40
According to the survey, 33 respondent preferred to 1 – 3 years investment,
13 respondent preferred to 4 – 6 years investments, 2 respondents preferred 7 –
10 years and 10 respondent preferred above 10 years.

[Link] PRINCIPLES BY RESPONDENT

Options No. of Reapondant PERCENTAGE

Enquiring about the fund manager 24 39.34

Finding about the past performance 25 40.98

Identifying your own objectives 12 19.67

Total 61 100%

No. of Reapondant
30
24 25
25
20
15 12
10
5
0
er ce ve
s
ag an cti
an rm je
nd
m
e rfo n
ob
fu s tp ow
he pa ur
utt he yo
o t g
ab ut yin
g bo tif
i rin a en
qu ng Id
En ndi
F i

Interpretation

According to the survey, 25 respondent preferred Finding about past

performance which is 40%, 24 respondent preferred Enquring about the fund

41
manager which is 39%, and 12 respondent preferred Identifying own objective
which is 20%.

[Link] SECTOR FOR INVESTING IN MF

Sector No. of Respondent PERCENTAGE

General 16 34.78
Oil and petroleum 8 17.39
Diversified equity fund 4 8.70
Debt fund 2 4.35
Banking fund 12 26.09
Real estate fund 4 8.70
Total 46 100%

PREFERRED SECTOR
4

16
12

2
4 8

Genral Oil and petroleum Diversified equity fund

Debt fund Banking fund Real estste fund

Interpretation

42
According to the survey, 16 respondent preferred General sector which is 35%,
12 respondent preferred Banking fund which is 26%, 8 respondent preferred oil
and petroleum which is 17%, 4 respondent preferred Diversified equity fund which
Is 9%, 4 respondent preferred real estate fund which is 9%,and 2 4 respondent
preferred debt fund which is 4%

[Link] RETURN BY RESPONDENT

Option No. of Respondent PERCENTAGE

Dividend payout 19 40.43

Dividend re-investment 20 42.55

Growth in NAV 8 17.02

Total 47 100%

No. of Reapondant

17%
Divident payout
Divident re-investment
40%
Growth in NAV

43%

Interpretation

43
According to the survey, 20 respondent select Dividend re-investment which is
43%, 1920 respondent select Dividend Pay-out which is 40% and 820
respondent select Growth in NAV which is 17%.

[Link] INVESTMENT BY RESPONDENT

Option No. of Respondent PERCENTAGE

Mutual fund 24 39.34

Stock market 14 22.95

Bank deposits 20 32.79

Other 3 4.92

Total 61 100%

PREFERRED INVESTMENT OPTION

24

20

14

Mutual fund Stock market Bank deposits Other

44
Interpretation

According to the survey, 24 respondent preferred mutual fund which is 39%,

20 respondent preferred Bank deposit which is 33%, 14 respondent preferred

Stock market which is 23% and 3 respondent preferred Other which is 5%.

[Link] NOT INVESTED IN MUTUAL FUNDS

Option No. of Respondent PERCENTAGE

Not aware of mutual fund 14 25.00

Higher risk 10 17.86

Not any specific reason 28 50.00

Other 4 7.14

Total 56 100%

No. of Reapondant

7%
25% Not aware of mutual fund
Higher risk
Not any specific reason
Other

50% 18%

45
Interpretation

According to the survey, 28 respondent have not specific reason which is 50%,

14 respondents have not aware about mutual fund which is 25%, 10 respondents
believe that mutual fund are have higher risk which is 18% and 4 respondent
have other reasons which is 7%.

CHAPTER: 5. FINDINGS, SUGGESTION AND CONCLUSION

FINDINGS

a. In majority of the respondents the knowledge level is confined to good

knowledge. Approximately 10% of the respondents do not have proper
knowledge about Mutual funds.

b. The respondents are well acquainted with mutual fund terms and many
respondents do not know technical terms like ENTRY LOAD, EXIT
LOAD, OPEN-ENDED & CLOSE-ENDED.

c. More than 50% of respondents are educated about mutual funds through
advertisements, friends and relatives.

d. The respondents’ awareness level shows that many people have

knowledge about Growth and Income Schemes rather than Balanced and
Dividend Schemes.

e. Many Respondents have clear knowledge about the potential advantages

of investing in mutual funds.

f. Bankers play the vital role in influencing the respondents to invest in

mutual funds and they make the investor to invest in their banks mutual
fund schemes

46
SUGGESTION

a. Mutual fund companies may try to educate the investors to invest in

mutual funds through regular awareness programs.

b. Fund Managers should try to give clear information about the mutual
fund terms and various schemes.

c. Fund Agents may take steps to shrink the terms and conditions and can
make them easily understandable to the prospective investors.

d. Mutual Fund Agencies may spread the information about all the aspects
of investing in mutual funds.

e. Various schemes may be introduced to attract female respondents as the

economy is

47
CONCLUSION

In this survey, graduate respondents are chosen as they have approachable

knowledge about mutual fund. The general knowledge & awareness level
among the individual investors are so good. Mutual funds are cornering the
maximum attention of the investors in today’s scenario be it individual or
corporate investors. This is because of the reason that there is a perception
amongst these investors that mutual funds give quick and more returns as
compared to other avenues and instruments of investments. This is the most
prominent factor for the acceptance and growth of mutual funds amongst the
populace of India in recent times

48
BIBLIOGRAPHY

[Link]
[Link]
[Link]
[Link]

49